Don't expect shock therapy in reforms, PM tells EU

PTIOct 10, 2002, 01.18am IST

COPENHAGEN: Hitting out at the critics of India's "slow" economic reforms, Prime Minister Atal Bihari Vajpayee on Wednesday said there cannot be a "shock therapy approach" to them and they were being implemented with a human face.

He also asked the European Union to address the concerns of developing countries by dismantling high agricultural subsidies and other non-tariff barriers

"A democratic elected government has to be sensitive to these realities. Public accountability and a social conscience have to govern its actions. It cannot adopt a shock therapy approach to economic reforms," Vajpayee, who will attend Thursday's third India-EU Summit, said.

Addressing the India-EU Business Summit, he said, "We often hear critical comments about the pace of our reforms. But remember that the same subcontinental size and population, which makes India an attractive market, also accomodate a diversity of perspectives, interests and needs. There are vast disparities in income and living conditions."

He said Europe also confronted the reality of its diversity during its debates on integration, enlargement, single currency and common foreign and security policy.

"You discovered that only a process of consensus with participation of all the principal stakeholders can generate sustainable policies. You can therefore understand our perspectives," he said.

The Prime Minister said, "It has become a fashion these days to liken economies to real and mythical creatures like elephants, tigers and dragons.

"The Indian economy is often identified with the elephant. I have no problem with this analogy. Elephants may take time to get all parts of their cast bodies moving forward in unison. But once they actually start moving, the momentum is very difficult to divert, slow down, stop or reverse. And when they move, the forest shakes."

Asking the EU to address the concerns of the developing world, Vajpayee said a starting point could be dismantling of high agricultural subsidies which greatly harmed their growth prospects.

"We also have a serious problem with non-tariff barriers against developing country products on ostensible environmental or social concerns. Other developmental linkages can follow," he stressed.

Observing that relations between EU and India are developing, Danish Prime Minister Anders Fogh Rasmussen said the India-EU Summit would be an occasion to strengthen cooperation between the two sides.

"We wish to develop both the political dialogue as well as economic cooperation with India," he said.

He said the situation in southern Asia including Indo-Pak relations and the situation in Kashmir would figure during the talks.

"It is extremely important that tension in the region is calmed. India and Pakistan ought to establish a dialogue on matters of security. The same applies to the situation in Kashmir," Rasmussen said.

Noting that India has great potential which should be enhanced to mutual benefit, he said a number of cooperation agreements including an initiative to further Danish-Indian trade and investments would be discussed during the visit.

Agreements for enhancing cooperation in science and technology, tariffs and maritime transport would also be examined by the two sides.

Vajpayee said India-EU cooperation could not be viewed without reference to the shared commitment of building a world free of disparities and with equal opportunities for all nations.

Noting that the global economy was facing a prolonged slowdown, he said this was not merely because of the cyclical nature of business.

"Its roots run deeper into the structural imbalances of the global economy. It is widely accepted that the most reliable stimulus for sustainable growth of the developed economies is their constructive engagement with the developing countries.

"This economic engagement has to be consistent with the preservation of their environmental resources, social values and cultural identities," he emphasised.

Vajpayee said the EU was of great importance to India as its largest trading partner, accounting for about a quarter of its external trade.

He said Europe's governments and businesses saw the immense potential in India, given the synergies for business collaboration and economic interaction.

Maintaining that the Indian economy has been living up to its expection, he said it was today the world's fourth largest economy having an average growth of over eight per cent since 1980.

Conceding that "some shortcomings" still disappointed the expectations of overseas business partners, he said steps were being taken to rectify them.

"We are building a national consensus on labour reforms, heeding the needs of both business partners and labour," he said.

"We know that foreign investors are often vexed by an excess of procedure, paperwork and bureaucracy. This is not a malaise unique to India. We are trying to tackle it with a national programme involving e-governance."

He said India's growing markets in a liberalising regime and the EU's thrust for expansion and diversification provided rapidly growing prospects for India-EU cooperation.

Danish Prime Minister Anders Fogh Rasmussen said India was becoming increasingly important as a partner in bilateral trade with EU which recognised its huge potential.

With the Indian economy opening up, the business and investment climate for foreign business was becoming more favourable and accessible, he said adding, "I hope and believe that these important economic reforms will continue."

Reflecting concerns over Indian tariff barriers, Henriette Soltoft, chief consultant at the Danish industry, said these were "as tall as the Taj Mahal" and tied to low quotas.

He said that on a long-term basis, the Danish industry wanted full liberalisation of trading of agricultural produce and foodstuff while at the same time developing a global standard for food safety.